Myhrvold on Patents

Following up yesterday’s Patent discussion, I noticed that Nathan Myhrvold, who spent 14 years as Microsoft’s chief technology officer, had an Op-Ed piece in the WSJ yesterday on Patents. Myhrvold explodes the myths about the danger "patent trolls."

The section I had found most intriguing was this:

"Large tech companies do amass significant portfolios, but often not
directly related to their business model. If a rival company asserts a patent, a
company like this plays defense and threaten the asserter’s products right back.While "defense" sounds benign, what it can mean in practice is having enough
patents that you can steal from anybody else with impunity. Between big
companies this works like a powerful shield, much like the doctrine of mutually
assured destruction with nukes. But the shield is impotent against universities,
companies without products or independent inventors. Owners of large defensive
portfolios hate that. (emphasis added)

That’s a pretty straight forward indictment by someone who knows, right from the heart of the tech industry.

Myhrvold continues:

In the 14 years I served as Microsoft’s first chief technology
officer, I saw this firsthand across the ranks of the computer industry. Tech
companies work extremely hard to use state-of-the-art technology, and either be
first to market or a fast follower — all else falls by the wayside. Big tech
companies are happy to hire the best people from rivals, universities and small
companies. Their employees attend conferences and study technical papers to stay
on the cutting edge. But they pretend that the patents on the technology in
those papers, or from universities or small companies, don’t exist. Many of the
largest tech companies have a standing policy that engineers are not allowed to
read patents or check whether their work infringes. Why bother to look, if you
know you’ll find lots of infringement? Besides the cost, it’s a distraction that
might hurt time to market. Their strategy is simple — damn the torpedoes, full
speed ahead.

And the problem with this is . . .?

The trouble is, this cavalier attitude toward the law runs afoul
of the rights of legitimate patent holders and the big tech companies know this.
Rather than pay out a small fraction of their huge profits, they’re fighting a
campaign to weaken patent laws for the little guy. Some of this has taken place
in Congress under the banner of "patent reform." The eBay case aims to achieve
the same ends in the courts.

It’s hard to go to Congress or the courts and admit that you’re
one of the richest companies in the world, have huge profit margins and infringe
lots of valid patents held by honorable people . . . but you don’t want to pay
them. So naturally, these companies paint a different picture. They claim that
patents are low quality; yet there is no objective evidence of this. They claim
patent litigation is exploding; but the actual figures show just the opposite.
There are fewer patent lawsuits than copyright, trademark or other major forms
of commercial litigation. (emphasis added)

I think Myhrvold paints a pretty compelling picture — but then again, I am biased.

Spread the wealth.

What's been said:

Much of the online debate about patent reform has been centered on addressing the problem of information technology patent law “abusers”. In his Inventors Have Rights, Too!, Nathan Myhrvold argues against the weakening of patent laws. The way he sees i…

In the interest of full disclosure, Myhrvold is not exactly a disinterested soul. Check out this Economist excerpt:

Voracious venture
Oct 20th 2005
From The Economist print edition
A new intellectual-property business model

“WHEN visitors walk into the headquarters of Intellectual Ventures, they come face to face with the full-size head of a Tyrannosaurus rex—the special-effects model used in the film “Jurassic Park II”. Is that a hint that the company wants to eat IT companies alive?

“Nathan Myhrvold, its founder, thinks not. He is excited about the company’s strategy, which he describes as “an experiment”. Intellectual Ventures represents a radically new business model for technology—a cross between a venture-capital fund, a law firm and an R&D lab. It wants to finance inventors to do what they do best—invent—and obtain patents on those technologies. Then it wants to license those innovations to the world (and pursue infringers with razor-fanged determination). The IT industry is terrified of it.”

It seems as though large companies, in the zeal to get to market first, and satisfy shareholders fail to worry if the actions they take are legal.

This seems to hold the doctrine of if you are not arrested for criminal actions then all violations of laws are subject to court room review. Which is costly, time consuming and burden of proof is placed in the hands of others, be it the government or the plaintiff.

I don’t know Myhrvold personally but I’ve always respected him as a standup guy. Even when he worked at MS. :) What you posted is just disgusting.

I think it all goes back to the corporatism and sellout of Congress. Both sides are just as culpable. Washington is for sale and has been for decades. How could my employer void a retirement contract which I had worked under for twelve years while they are making record profits? Isn’t a contract binding? Oh, I guess not. I think I’ll just flip the bird at my mortgage company. I’ll tell you how, because the jezebel whores in Washington let them. Excuse my english but it potentially took seven figures out of my pocket.

For those who want to say it is Dems or Reps, that’s hogwash. This patent situation exemplifies the same problem.

Now, I don’t take sides but I find this rather disgusting and truthful. And the 103 page PDF link is enough to make me want to commit seppuku. The reality is it is both parties so the laughable part of the link is the indictment of one by the other. Although I will say the Republicans appear to have taken it to an art form. I hope Abramoff destroys Washington so we can rebuild it with laws to protect us from them.

As a patent attorney, I feel that I can add some useful comments here.

The issue in the Ebay case is not about whether to compensate or not compensate the patent trolls/owners. The patent owners will get compensated regardless of the Supreme court ruling.

The real issue there is whether the patent owner should be compensated over and above what they are worth simply because of the threat of a permanent injunction against the infringer. Right now, any patent troll/owner can threaten to permanently shut down the infringer’s business regardless of how trivial the patents may be. That is a huge club that can be used very effectively against the infringer to extract unreasonably high compensation compared to what the patents are worth.

If the Supreme Court limits the use of a permanent injunction by patent trolls with no real business of their own, I feel that it will substantially decrease the number of patent lawsuits.

As an engineer, I see the other side. Whenever you develop something new (especially in software nowadays), you’re pretty darn likely to run into a patent that covers what you’re up to.

Patents are supposed to be for things that are non-obvious to the skilled practitioner in the field. If just anyone keeps getting hemmed in by patents on everyday developments, clearly there’s a problem with the patents being granted.

And, as far as not looking at patents when you develop something new – you’re liable for triple damages if you wilfully infringe. Doing a patent search before you start on something almost certainly guarantees that you’ll “wilfully” infringe, because there’s a patent that covers practically anything non-trivial. So, you’re damned if you do, damned if you don’t.

Never mind what the lawyers and business people are arguing about – the poor engineers and scientests out there trying to do the innovating are being stifled by the current patent system. There’s too much patenting of nonsense, and trolling (by everyone – large companies and small), and too little focus on real innovation.

If the engineers that develop new computer products are really encouraged never to look at patents at all, then it just shows that patents in that field are doing nothing to serve their purpose of advancing the useful arts. We could just get rid of computer technology patents altogether and nothing would be lost.

Assembling large pools of patents is not a new development in US business. Indeed, as historical research into the advent of industrial research organizations has shown, it was the defensive nature of patents–using them to protect current markets, rather than to open new ones–that was the prime motive for companies paying for in-house research and development labs. This fact does not mean that there is nothing new or wrong w/ the current patent system, but the corporate practices described are not new, and so cannot be ascribed to new patent laws or policies. Current laws or policies may, however, be exacerbating the effect of long-existing practices.

Mr. Myhrvold says that big companies are going to ignore patents held by smaller and weaker innovators, but may use them to crush smaller and weaker innovators who cannot afford to ignore patents. You argue that this system is good, presumably because it allows large companies to ignore and crush smaller ones. A large company with good lawyers can avoid ever having to compete on the merits of its products.

A stronger patent system would only enhance the power of large companies to ignore and crush smaller and weaker ones. A weaker system would put smaller companies on a more even footing and is likely to foster more innovation and merit based competition.

All I can say is that we should be thankful that there were no software patents in the early days of computer innovation or the United States would have never developed a software industry. Remember the Wright brothers who kept the US out of aviation until their patents expired while the patent free Europeans conquered the air.

Patents are supposed to be granted for inventions not obvious to someone of average skill in the art, but most software patents are for pedestrian designs that are nothing more than what you’d expect as everyday work product from an average software developer.

Fortunately they didn’t start granting software patents like that until after the US computer industry was well developed. If they had, it would have been strangled in the crib.